Help to Buy achieved little and new builds are the answer, exec says
Government initiatives such as Help to Buy have achieved little and Labour must now concentrate on building more housing, according to Stuart Cheetham, the CEO of digital lender MPowered Mortgages.
Cheetham (pictured) believes new builds will stimulate the market, and he anticipates that potential base rate reductions could drive growth in lending volumes in 2025.
Affordability remains a challenge for many borrowers, even with house prices being static for the best part of two years, Cheetham said.
“Government schemes such as Help to Buy, shared ownership and shared equity have done very little to solve the homeownership problem we have in this country,” he told Mortgage Introducer.
“What we need is a focus on building more housing and this is what we think the government needs to address first and foremost as this will help to stimulate the housing market. Furthermore, if the base rate continues to fall, this will help first-time buyers which can only be a good thing for this market.”
Cheetham acknowledged the rapid-fire changes to mortgage pricing – recent days have seen some industry turbulence, with Santander pulling a five-year fixed rate and Barclays increasing one of its mortgage rates, while announcing other rate cuts of up to 0.50%.
“Mortgage rates have been falling for a significant period of time in recent months,” he noted, “however in the past week we have seen more of an inconsistent pattern with mortgage rates, with some lenders still reducing rates, whilst others increase rates.
“Despite recent comments from (Bank of England Governor) Andrew Bailey stating rate cuts could happen more aggressively, swap markets rose last week which doesn’t paint the rosiest picture. Furthermore, geopolitical events such as speculation of a US recession, the price of oil and the outcome of the pending Budget means the direction of mortgage rates seems less certain.”
MPowered Mortgages scrutinises the market closely, he emphasised.
“It’s vital to keep on top of the competition in this market, more so in mortgages than in other financial services industries given how quickly pricing can change,” he said. “Rates changes are happening at an incredible rate and to such low lending margins which I’ve not seen in many years, so if you don’t have a competitive product offering, you won’t achieve the volumes you need.
“We monitor rates daily and benchmark ourselves against the top 10 residential lenders across a number of key rates and metrics.”
How might the mortgage market perform over the next 12 months?
The CEO will be closely monitoring the decisions of the Bank of England’s Monetary Policy Committee, too, over the next 12 months – to see if it delivers the base rate decisions that he believes could underpin the mortgage market’s revival.
“With a lower Bank base rate - by exactly how much is a bit of an open question at the moment - this will have a positive impact on the housing market and lending in general,” Cheetham said. “A lower Bank base rate will also have a positive impact on house prices for the first time in two years as affordability improves and this will drive growth in overall lending volumes for 2025.”
Read more: Is a first-time buyer mortgage six times income a stretch too far?
Does it take too long to get a mortgage offer?
Cheetham believes that one of the biggest challenges facing the market currently is the wait that borrowers and their advisers must face to be approved for a mortgage.
“Lenders’ service levels are not hitting the mark primarily because the length in which it takes to get a mortgage offer is far too long and this is a pain point for both brokers and their customers,” he said, adding that MPowered is striving to provide as many customers as it can with instant decisions- or at least within 24 hours.
MPowered Mortgages was established in 2021 as the lending arm of MQube. It launched into the prime residential marketplace in 2022, securing further institutional investment that year. Following a successful pilot, it expanded to whole-of-market distribution in 2023.
“Since setting up MPowered Mortgages, it’s been fantastic to see the shift towards the adoption of technology in our industry, focused on enhancing the customer experience,” reflected Cheetham. “The industry’s complexity and regulatory landscape have also become more pronounced, but these challenges present opportunities for fintechs like us to benefit from our agility and ability to streamline processes and provide greater transparency. This evolution is exciting.”
So, what is the best business lesson that Cheetham has learned in his career so far?
“Delivering innovation is all about empowering people to fix problems in new and different ways,” he said. “Building a team of really smart and motivated people is only possible if when you genuinely give them ownership to deliver change. No micromanagement, celebrate the wins and no blame with the mistakes. We learn from our failures as much, if not more, than our successes.”
In an ever more complex market, Cheetham believes that personalisation is the key to brokers’ success, considering them to be ‘the beating heart of the mortgage industry’.
“We recognise that and that’s why we are a broker-only lender,” he said. “By focusing on personalised service brokers can better meet the needs of their clients with greater certainty.”
